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Monk, Inc., is considering a capital budgeting project in Tunisia. The project requires an initial outlay of 2 million Tunisian dinars; the dinar is currently valued at $0.80. In the first and second years of operation, the project will generate 1,200,000 dinars in each year. After two years, Monk will terminate the project, and the expected salvage value is 600,000 dinars. Monk has assigned a discount rate of 11 percent to this project. The following additional information is available:

• There is currently no withholding tax on remittances to the United States, but there is a 20 percent chance that the Tunisian government will impose a withholding tax of 5 percent beginning next year.
• There is a 50 percent chance that the Tunisian government will pay Monk 500,000 dinar after two years instead of the 600,000 dinars it expects.
• The value of the dinar is expected to remain unchanged over the next two years.

Let define:

• Scenario 1: No withholding taxes, 600,000 dinar salvage value
• Scenario 2: 5% withholding tax, 600,000 dinar salvage value
• Scenario 3: 5% withholding tax, 500,000 dinar salvage value
• Scenario 4: No withholding taxes, 500,000 dinar salvage value

Determine the net present value of the project in each of the four possible scenarios. Do not round intermediate calculations. Round your answers to the nearest dollar.

NPV in Scenario 1: $

NPV in Scenario 2: $

NPV in Scenario 3: $

NPV in Scenario 4: $

Determine the joint probability of each scenario. Round your answers to the nearest whole number.

Joint probability of Scenario 1: %

Joint probability of Scenario 2: %

Joint probability of Scenario 3: %

Joint probability of Scenario 4: %

Compute the expected NPV of the project. Do not round intermediate calculations. Round your answer to the nearest dollar.

$

Make a recommendation to Monk regarding its feasibility.

Monk -Select-shouldshould notItem 10 undertake the project.